Collateral constraints and rental markets

Journal article: We study a benchmark model with collateral constraints and heterogeneous discounting. Contrarily to a rich literature on borrowing limits, we allow for rental markets. By incorporating this missing market, we show that impatient agents choose to rent rather than to own the collateral in the neighborhood of the deterministic steady state. Consequently, impatient agents are not indebted and borrowing constraints play no role in local dynamics.

Author(s)

Hippolyte d’Albis, Eleni Iliopulos

Journal
  • Economics Letters
Date of publication
  • 2013
Keywords JEL
E R
Keywords
  • Heterogeneous discounting
  • Collateral constraints
  • Rental market
  • Credit market
  • Credit market
Pages
  • 436-439
Version
  • 1
Volume
  • 121